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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $95,000 $92,000 Total variable costs 52,250 55,200
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $95,000 | $92,000 | ||
Total variable costs | 52,250 | 55,200 | ||
Total contribution margin | $42,750 | $36,800 | ||
Total fixed costs | ||||
Avoidable | 30,934 | 13,854 | ||
Unavoidable | 23,336 | 12,286 | ||
Profit | $-11,520 | $10,660 |
If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $31,700, with $4,800 of additional fixed costs, what will be the effect on firm profits?
A: $-2,519 | B: $-3,149 | C: $-3,936 | D: $-4,920 | E: $-6,150 | F: $-7,688 |
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